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Labor Theory of Value

bballcrook21
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4/21/2016 1:56:00 AM
Posted: 7 months ago
The most fundamental flaw in Marx's theory of value is the premise that the value of goods is determined by their cost of production alone. This fallacy was pointed out as early as 1871 by Carl Menger, who observed that the value of a diamond is the same whether it was found by accident or whether it was found as a result of a thousand days of a miner's labor.

The model becomes even less robust in the context of the modern knowledge economy, where the commodity being traded is principally intellectual property. When I employ someone to write me an iPhone app, the value of it relates almost entirely to the demand which is subsequently generated for it. If I pay my developer $1500 to write the app and it takes him a week, then I promote it and sell it to a million people for a dollar each, was his labor worth a million dollars? Or was most of the value in the idea I had and my skill in selling it? If I fail to sell it at all, was his labor therefore worthless?

This leads on to the next problem with Marx's theory of value which is it that it does not attribute any value to the risk taken by the entrepreneur. The entrepreneur risks his capital, time and reputation in order to provide a stable wage for the employee. Consider a Silicon Valley startup in which the developers are paid a good wage over a period of several years to work on an application or website which generates no revenue. If the venture can monetize then the entrepreneur may gain a huge payout, but it is also highly likely that the venture will fail. Eventually the capital will all be burned and the workers will be made redundant, but not until they have enjoyed a considerable period of gainful employment producing something of no realizable value.

Marx proposed that only labor could add value. The corollary of this is that labor-intensive industries (such as the cotton mills of Victorian Manchester which so inspired Marx's work) should return higher profits than less labor-intensive industries, but there is no evidence to support this. Indeed, in the modern economy, and perhaps ironically as a consequence of Marx's work, the reverse is more likely to be true.

Underlying all of this is Marx's prediction that profit will diminish over time and that capitalism is therefore a finite phase which must inevitably give way to something else. Here the premise is partly correct in that within any given industry, provided there is an effective level of competition, total profit will tend towards zero as the industry matures. However, this is actually the fundamental strength of capitalism rather than its weakness, because as mature industries become more optimized and less resources are required to fulfill production within them, the pursuit of profit will lead entrepreneurs to discover new opportunities and develop new industries.
If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand. - Friedman

Underlying most arguments against the free market is a lack of belief in freedom itself. -Friedman

Nothing is so permanent as a temporary government program. - Friedman

Society will never be free until the last Democrat is strangled with the entrails of the last Communist.
ColeTrain
Posts: 4,288
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4/21/2016 3:50:29 AM
Posted: 7 months ago
At 4/21/2016 1:56:00 AM, bballcrook21 wrote:
The most fundamental flaw in Marx's theory of value is the premise that the value of goods is determined by their cost of production alone. This fallacy was pointed out as early as 1871 by Carl Menger, who observed that the value of a diamond is the same whether it was found by accident or whether it was found as a result of a thousand days of a miner's labor.

This is true.

The model becomes even less robust in the context of the modern knowledge economy, where the commodity being traded is principally intellectual property. When I employ someone to write me an iPhone app, the value of it relates almost entirely to the demand which is subsequently generated for it. If I pay my developer $1500 to write the app and it takes him a week, then I promote it and sell it to a million people for a dollar each, was his labor worth a million dollars? Or was most of the value in the idea I had and my skill in selling it? If I fail to sell it at all, was his labor therefore worthless?

This is accurate. Imho, the value of labor is determined by a variety factors, and I actually made a thread about that, which you should check out: [http://www.debate.org...]

As for the worker who wrote your app... The general idea is to accrue profit, so his labor shouldn't be worth the same numerical figure as the capital you bring in, it should rather be dependent upon (a) how much you sell, and (b) how much of that sale *was* due to marketing.

This leads on to the next problem with Marx's theory of value which is it that it does not attribute any value to the risk taken by the entrepreneur. The entrepreneur risks his capital, time and reputation in order to provide a stable wage for the employee. Consider a Silicon Valley startup in which the developers are paid a good wage over a period of several years to work on an application or website which generates no revenue. If the venture can monetize then the entrepreneur may gain a huge payout, but it is also highly likely that the venture will fail. Eventually the capital will all be burned and the workers will be made redundant, but not until they have enjoyed a considerable period of gainful employment producing something of no realizable value.

Very true. Going out on a limb to start something is a risk, and should be a factor in determining how much value should be accredited. There are levels, too, of how successful the risk is. Utter failure, failure, mediocrity, success, overwhelming success, etc.

Marx proposed that only labor could add value. The corollary of this is that labor-intensive industries (such as the cotton mills of Victorian Manchester which so inspired Marx's work) should return higher profits than less labor-intensive industries, but there is no evidence to support this. Indeed, in the modern economy, and perhaps ironically as a consequence of Marx's work, the reverse is more likely to be true.

Especially with the advance of technology, and its replacement of work (which I also made a thread about: [http://www.debate.org...]) further disproves the claim that more labor is require to accrue higher profits and add value. Also, something which requires rudimentary work/skill can sell just as well as a product very difficult to make, which is, I think, what you were driving at.

Underlying all of this is Marx's prediction that profit will diminish over time and that capitalism is therefore a finite phase which must inevitably give way to something else. Here the premise is partly correct in that within any given industry, provided there is an effective level of competition, total profit will tend towards zero as the industry matures. However, this is actually the fundamental strength of capitalism rather than its weakness, because as mature industries become more optimized and less resources are required to fulfill production within them, the pursuit of profit will lead entrepreneurs to discover new opportunities and develop new industries.

Agreed. Products become no longer new, and their inherent value in the environment in which they are placed declines. The slack, though, isn't normally severe. Worst case scenarios involved technology, where new becomes old in a matter of months, nearly. The positive in this, though, is that any reputable company keeps innovation flowing to keep up with new demands and maintain admirable value.
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
bballcrook21
Posts: 4,468
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4/21/2016 3:54:40 AM
Posted: 7 months ago
At 4/21/2016 3:50:29 AM, ColeTrain wrote:
At 4/21/2016 1:56:00 AM, bballcrook21 wrote:
The most fundamental flaw in Marx's theory of value is the premise that the value of goods is determined by their cost of production alone. This fallacy was pointed out as early as 1871 by Carl Menger, who observed that the value of a diamond is the same whether it was found by accident or whether it was found as a result of a thousand days of a miner's labor.

This is true.

The model becomes even less robust in the context of the modern knowledge economy, where the commodity being traded is principally intellectual property. When I employ someone to write me an iPhone app, the value of it relates almost entirely to the demand which is subsequently generated for it. If I pay my developer $1500 to write the app and it takes him a week, then I promote it and sell it to a million people for a dollar each, was his labor worth a million dollars? Or was most of the value in the idea I had and my skill in selling it? If I fail to sell it at all, was his labor therefore worthless?

This is accurate. Imho, the value of labor is determined by a variety factors, and I actually made a thread about that, which you should check out: [http://www.debate.org...]

As for the worker who wrote your app... The general idea is to accrue profit, so his labor shouldn't be worth the same numerical figure as the capital you bring in, it should rather be dependent upon (a) how much you sell, and (b) how much of that sale *was* due to marketing.

This leads on to the next problem with Marx's theory of value which is it that it does not attribute any value to the risk taken by the entrepreneur. The entrepreneur risks his capital, time and reputation in order to provide a stable wage for the employee. Consider a Silicon Valley startup in which the developers are paid a good wage over a period of several years to work on an application or website which generates no revenue. If the venture can monetize then the entrepreneur may gain a huge payout, but it is also highly likely that the venture will fail. Eventually the capital will all be burned and the workers will be made redundant, but not until they have enjoyed a considerable period of gainful employment producing something of no realizable value.

Very true. Going out on a limb to start something is a risk, and should be a factor in determining how much value should be accredited. There are levels, too, of how successful the risk is. Utter failure, failure, mediocrity, success, overwhelming success, etc.

Marx proposed that only labor could add value. The corollary of this is that labor-intensive industries (such as the cotton mills of Victorian Manchester which so inspired Marx's work) should return higher profits than less labor-intensive industries, but there is no evidence to support this. Indeed, in the modern economy, and perhaps ironically as a consequence of Marx's work, the reverse is more likely to be true.

Especially with the advance of technology, and its replacement of work (which I also made a thread about: [http://www.debate.org...]) further disproves the claim that more labor is require to accrue higher profits and add value. Also, something which requires rudimentary work/skill can sell just as well as a product very difficult to make, which is, I think, what you were driving at.

Underlying all of this is Marx's prediction that profit will diminish over time and that capitalism is therefore a finite phase which must inevitably give way to something else. Here the premise is partly correct in that within any given industry, provided there is an effective level of competition, total profit will tend towards zero as the industry matures. However, this is actually the fundamental strength of capitalism rather than its weakness, because as mature industries become more optimized and less resources are required to fulfill production within them, the pursuit of profit will lead entrepreneurs to discover new opportunities and develop new industries.

Agreed. Products become no longer new, and their inherent value in the environment in which they are placed declines. The slack, though, isn't normally severe. Worst case scenarios involved technology, where new becomes old in a matter of months, nearly. The positive in this, though, is that any reputable company keeps innovation flowing to keep up with new demands and maintain admirable value.

So basically, I'm right? :D
If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand. - Friedman

Underlying most arguments against the free market is a lack of belief in freedom itself. -Friedman

Nothing is so permanent as a temporary government program. - Friedman

Society will never be free until the last Democrat is strangled with the entrails of the last Communist.
ColeTrain
Posts: 4,288
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4/21/2016 3:55:23 AM
Posted: 7 months ago
At 4/21/2016 3:54:40 AM, bballcrook21 wrote:
At 4/21/2016 3:50:29 AM, ColeTrain wrote:
At 4/21/2016 1:56:00 AM, bballcrook21 wrote:
The most fundamental flaw in Marx's theory of value is the premise that the value of goods is determined by their cost of production alone. This fallacy was pointed out as early as 1871 by Carl Menger, who observed that the value of a diamond is the same whether it was found by accident or whether it was found as a result of a thousand days of a miner's labor.

This is true.

The model becomes even less robust in the context of the modern knowledge economy, where the commodity being traded is principally intellectual property. When I employ someone to write me an iPhone app, the value of it relates almost entirely to the demand which is subsequently generated for it. If I pay my developer $1500 to write the app and it takes him a week, then I promote it and sell it to a million people for a dollar each, was his labor worth a million dollars? Or was most of the value in the idea I had and my skill in selling it? If I fail to sell it at all, was his labor therefore worthless?

This is accurate. Imho, the value of labor is determined by a variety factors, and I actually made a thread about that, which you should check out: [http://www.debate.org...]

As for the worker who wrote your app... The general idea is to accrue profit, so his labor shouldn't be worth the same numerical figure as the capital you bring in, it should rather be dependent upon (a) how much you sell, and (b) how much of that sale *was* due to marketing.

This leads on to the next problem with Marx's theory of value which is it that it does not attribute any value to the risk taken by the entrepreneur. The entrepreneur risks his capital, time and reputation in order to provide a stable wage for the employee. Consider a Silicon Valley startup in which the developers are paid a good wage over a period of several years to work on an application or website which generates no revenue. If the venture can monetize then the entrepreneur may gain a huge payout, but it is also highly likely that the venture will fail. Eventually the capital will all be burned and the workers will be made redundant, but not until they have enjoyed a considerable period of gainful employment producing something of no realizable value.

Very true. Going out on a limb to start something is a risk, and should be a factor in determining how much value should be accredited. There are levels, too, of how successful the risk is. Utter failure, failure, mediocrity, success, overwhelming success, etc.

Marx proposed that only labor could add value. The corollary of this is that labor-intensive industries (such as the cotton mills of Victorian Manchester which so inspired Marx's work) should return higher profits than less labor-intensive industries, but there is no evidence to support this. Indeed, in the modern economy, and perhaps ironically as a consequence of Marx's work, the reverse is more likely to be true.

Especially with the advance of technology, and its replacement of work (which I also made a thread about: [http://www.debate.org...]) further disproves the claim that more labor is require to accrue higher profits and add value. Also, something which requires rudimentary work/skill can sell just as well as a product very difficult to make, which is, I think, what you were driving at.

Underlying all of this is Marx's prediction that profit will diminish over time and that capitalism is therefore a finite phase which must inevitably give way to something else. Here the premise is partly correct in that within any given industry, provided there is an effective level of competition, total profit will tend towards zero as the industry matures. However, this is actually the fundamental strength of capitalism rather than its weakness, because as mature industries become more optimized and less resources are required to fulfill production within them, the pursuit of profit will lead entrepreneurs to discover new opportunities and develop new industries.

Agreed. Products become no longer new, and their inherent value in the environment in which they are placed declines. The slack, though, isn't normally severe. Worst case scenarios involved technology, where new becomes old in a matter of months, nearly. The positive in this, though, is that any reputable company keeps innovation flowing to keep up with new demands and maintain admirable value.

So basically, I'm right? :D

Yes, now read my threads!
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
bballcrook21
Posts: 4,468
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4/21/2016 4:07:27 AM
Posted: 7 months ago
At 4/21/2016 3:55:23 AM, ColeTrain wrote:
At 4/21/2016 3:54:40 AM, bballcrook21 wrote:
At 4/21/2016 3:50:29 AM, ColeTrain wrote:
At 4/21/2016 1:56:00 AM, bballcrook21 wrote:
The most fundamental flaw in Marx's theory of value is the premise that the value of goods is determined by their cost of production alone. This fallacy was pointed out as early as 1871 by Carl Menger, who observed that the value of a diamond is the same whether it was found by accident or whether it was found as a result of a thousand days of a miner's labor.

This is true.

The model becomes even less robust in the context of the modern knowledge economy, where the commodity being traded is principally intellectual property. When I employ someone to write me an iPhone app, the value of it relates almost entirely to the demand which is subsequently generated for it. If I pay my developer $1500 to write the app and it takes him a week, then I promote it and sell it to a million people for a dollar each, was his labor worth a million dollars? Or was most of the value in the idea I had and my skill in selling it? If I fail to sell it at all, was his labor therefore worthless?

This is accurate. Imho, the value of labor is determined by a variety factors, and I actually made a thread about that, which you should check out: [http://www.debate.org...]

As for the worker who wrote your app... The general idea is to accrue profit, so his labor shouldn't be worth the same numerical figure as the capital you bring in, it should rather be dependent upon (a) how much you sell, and (b) how much of that sale *was* due to marketing.

This leads on to the next problem with Marx's theory of value which is it that it does not attribute any value to the risk taken by the entrepreneur. The entrepreneur risks his capital, time and reputation in order to provide a stable wage for the employee. Consider a Silicon Valley startup in which the developers are paid a good wage over a period of several years to work on an application or website which generates no revenue. If the venture can monetize then the entrepreneur may gain a huge payout, but it is also highly likely that the venture will fail. Eventually the capital will all be burned and the workers will be made redundant, but not until they have enjoyed a considerable period of gainful employment producing something of no realizable value.

Very true. Going out on a limb to start something is a risk, and should be a factor in determining how much value should be accredited. There are levels, too, of how successful the risk is. Utter failure, failure, mediocrity, success, overwhelming success, etc.

Marx proposed that only labor could add value. The corollary of this is that labor-intensive industries (such as the cotton mills of Victorian Manchester which so inspired Marx's work) should return higher profits than less labor-intensive industries, but there is no evidence to support this. Indeed, in the modern economy, and perhaps ironically as a consequence of Marx's work, the reverse is more likely to be true.

Especially with the advance of technology, and its replacement of work (which I also made a thread about: [http://www.debate.org...]) further disproves the claim that more labor is require to accrue higher profits and add value. Also, something which requires rudimentary work/skill can sell just as well as a product very difficult to make, which is, I think, what you were driving at.

Underlying all of this is Marx's prediction that profit will diminish over time and that capitalism is therefore a finite phase which must inevitably give way to something else. Here the premise is partly correct in that within any given industry, provided there is an effective level of competition, total profit will tend towards zero as the industry matures. However, this is actually the fundamental strength of capitalism rather than its weakness, because as mature industries become more optimized and less resources are required to fulfill production within them, the pursuit of profit will lead entrepreneurs to discover new opportunities and develop new industries.

Agreed. Products become no longer new, and their inherent value in the environment in which they are placed declines. The slack, though, isn't normally severe. Worst case scenarios involved technology, where new becomes old in a matter of months, nearly. The positive in this, though, is that any reputable company keeps innovation flowing to keep up with new demands and maintain admirable value.

So basically, I'm right? :D

Yes, now read my threads!

I did read them!
If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand. - Friedman

Underlying most arguments against the free market is a lack of belief in freedom itself. -Friedman

Nothing is so permanent as a temporary government program. - Friedman

Society will never be free until the last Democrat is strangled with the entrails of the last Communist.
ColeTrain
Posts: 4,288
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4/21/2016 1:58:34 PM
Posted: 7 months ago
At 4/21/2016 4:07:27 AM, bballcrook21 wrote:
At 4/21/2016 3:55:23 AM, ColeTrain wrote:
At 4/21/2016 3:54:40 AM, bballcrook21 wrote:
At 4/21/2016 3:50:29 AM, ColeTrain wrote:
At 4/21/2016 1:56:00 AM, bballcrook21 wrote:
The most fundamental flaw in Marx's theory of value is the premise that the value of goods is determined by their cost of production alone. This fallacy was pointed out as early as 1871 by Carl Menger, who observed that the value of a diamond is the same whether it was found by accident or whether it was found as a result of a thousand days of a miner's labor.

This is true.

The model becomes even less robust in the context of the modern knowledge economy, where the commodity being traded is principally intellectual property. When I employ someone to write me an iPhone app, the value of it relates almost entirely to the demand which is subsequently generated for it. If I pay my developer $1500 to write the app and it takes him a week, then I promote it and sell it to a million people for a dollar each, was his labor worth a million dollars? Or was most of the value in the idea I had and my skill in selling it? If I fail to sell it at all, was his labor therefore worthless?

This is accurate. Imho, the value of labor is determined by a variety factors, and I actually made a thread about that, which you should check out: [http://www.debate.org...]

As for the worker who wrote your app... The general idea is to accrue profit, so his labor shouldn't be worth the same numerical figure as the capital you bring in, it should rather be dependent upon (a) how much you sell, and (b) how much of that sale *was* due to marketing.

This leads on to the next problem with Marx's theory of value which is it that it does not attribute any value to the risk taken by the entrepreneur. The entrepreneur risks his capital, time and reputation in order to provide a stable wage for the employee. Consider a Silicon Valley startup in which the developers are paid a good wage over a period of several years to work on an application or website which generates no revenue. If the venture can monetize then the entrepreneur may gain a huge payout, but it is also highly likely that the venture will fail. Eventually the capital will all be burned and the workers will be made redundant, but not until they have enjoyed a considerable period of gainful employment producing something of no realizable value.

Very true. Going out on a limb to start something is a risk, and should be a factor in determining how much value should be accredited. There are levels, too, of how successful the risk is. Utter failure, failure, mediocrity, success, overwhelming success, etc.

Marx proposed that only labor could add value. The corollary of this is that labor-intensive industries (such as the cotton mills of Victorian Manchester which so inspired Marx's work) should return higher profits than less labor-intensive industries, but there is no evidence to support this. Indeed, in the modern economy, and perhaps ironically as a consequence of Marx's work, the reverse is more likely to be true.

Especially with the advance of technology, and its replacement of work (which I also made a thread about: [http://www.debate.org...]) further disproves the claim that more labor is require to accrue higher profits and add value. Also, something which requires rudimentary work/skill can sell just as well as a product very difficult to make, which is, I think, what you were driving at.

Underlying all of this is Marx's prediction that profit will diminish over time and that capitalism is therefore a finite phase which must inevitably give way to something else. Here the premise is partly correct in that within any given industry, provided there is an effective level of competition, total profit will tend towards zero as the industry matures. However, this is actually the fundamental strength of capitalism rather than its weakness, because as mature industries become more optimized and less resources are required to fulfill production within them, the pursuit of profit will lead entrepreneurs to discover new opportunities and develop new industries.

Agreed. Products become no longer new, and their inherent value in the environment in which they are placed declines. The slack, though, isn't normally severe. Worst case scenarios involved technology, where new becomes old in a matter of months, nearly. The positive in this, though, is that any reputable company keeps innovation flowing to keep up with new demands and maintain admirable value.

So basically, I'm right? :D

Yes, now read my threads!

I did read them!

Then tell me whether I'm right or wrong. :P
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
harrytruman
Posts: 812
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4/27/2016 4:36:01 AM
Posted: 7 months ago
At 4/21/2016 1:56:00 AM, bballcrook21 wrote:
The most fundamental flaw in Marx's theory of value is the premise that the value of goods is determined by their cost of production alone. This fallacy was pointed out as early as 1871 by Carl Menger, who observed that the value of a diamond is the same whether it was found by accident or whether it was found as a result of a thousand days of a miner's labor.

The model becomes even less robust in the context of the modern knowledge economy, where the commodity being traded is principally intellectual property. When I employ someone to write me an iPhone app, the value of it relates almost entirely to the demand which is subsequently generated for it. If I pay my developer $1500 to write the app and it takes him a week, then I promote it and sell it to a million people for a dollar each, was his labor worth a million dollars? Or was most of the value in the idea I had and my skill in selling it? If I fail to sell it at all, was his labor therefore worthless?

This leads on to the next problem with Marx's theory of value which is it that it does not attribute any value to the risk taken by the entrepreneur. The entrepreneur risks his capital, time and reputation in order to provide a stable wage for the employee. Consider a Silicon Valley startup in which the developers are paid a good wage over a period of several years to work on an application or website which generates no revenue. If the venture can monetize then the entrepreneur may gain a huge payout, but it is also highly likely that the venture will fail. Eventually the capital will all be burned and the workers will be made redundant, but not until they have enjoyed a considerable period of gainful employment producing something of no realizable value.

Marx proposed that only labor could add value. The corollary of this is that labor-intensive industries (such as the cotton mills of Victorian Manchester which so inspired Marx's work) should return higher profits than less labor-intensive industries, but there is no evidence to support this. Indeed, in the modern economy, and perhaps ironically as a consequence of Marx's work, the reverse is more likely to be true.

Underlying all of this is Marx's prediction that profit will diminish over time and that capitalism is therefore a finite phase which must inevitably give way to something else. Here the premise is partly correct in that within any given industry, provided there is an effective level of competition, total profit will tend towards zero as the industry matures. However, this is actually the fundamental strength of capitalism rather than its weakness, because as mature industries become more optimized and less resources are required to fulfill production within them, the pursuit of profit will lead entrepreneurs to discover new opportunities and develop new industries.

According to bAdam Smith, labor is the only fporm of value and the true indicxator of value- he was right.
Overhead
Posts: 106
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4/27/2016 9:47:41 PM
Posted: 7 months ago
At 4/21/2016 1:56:00 AM, bballcrook21 wrote:

I feel you misunderstand the basics of Marx and your criticisms are therefore fairly off base.

The most fundamental flaw in Marx's theory of value is the premise that the value of goods is determined by their cost of production alone. This fallacy was pointed out as early as 1871 by Carl Menger, who observed that the value of a diamond is the same whether it was found by accident or whether it was found as a result of a thousand days of a miner's labor.

No, this misunderstands the key concept value being based on Socially Necessary Labour Time (SNLT). https://en.wikipedia.org...

SNLT is based on the AVERAGE levels of productivity, so therefore extremes merely influence the average which effects all commodities of that type.

The model becomes even less robust in the context of the modern knowledge economy, where the commodity being traded is principally intellectual property. When I employ someone to write me an iPhone app, the value of it relates almost entirely to the demand which is subsequently generated for it. If I pay my developer $1500 to write the app and it takes him a week, then I promote it and sell it to a million people for a dollar each, was his labor worth a million dollars? Or was most of the value in the idea I had and my skill in selling it? If I fail to sell it at all, was his labor therefore worthless?

You seem to be confusing value and price. Value has very specific meaning and there are indeed several different types in marxist economics like use value, exchange value, surplus value, etc which all refer to different amounts of things.

Value, as in plain old value, is not measured in any amount of money because it refers to the labour time involved in the process of creating the product. Measuring the value he contributed is therefore based on the days, hours and minutes of SNLT involved in the production of the app from all sources (including second-order, third-order, etc sources)

Marx did believe that value and price were connected, but again only roughly and based on averages - with these being effected by other market features.

This leads on to the next problem with Marx's theory of value which is it that it does not attribute any value to the risk taken by the entrepreneur. The entrepreneur risks his capital, time and reputation in order to provide a stable wage for the employee. Consider a Silicon Valley startup in which the developers are paid a good wage over a period of several years to work on an application or website which generates no revenue. If the venture can monetize then the entrepreneur may gain a huge payout, but it is also highly likely that the venture will fail. Eventually the capital will all be burned and the workers will be made redundant, but not until they have enjoyed a considerable period of gainful employment producing something of no realizable value.

That's not an issue. Marx recognises the role of Capitalists in capitalism, but it simply has nothing to do with value because value (when used without any other modifier) is a term that refers to the SNLT embodied in a commodity.

The aspects you are talking are present in Marxism, but they have nothing to do with value because value has a specific definition that makes them irrelevant. On that basis this complaint is really just semantic and can be ignored. They are more relevant in discussions of surplus value.

Marx proposed that only labor could add value. The corollary of this is that labor-intensive industries (such as the cotton mills of Victorian Manchester which so inspired Marx's work) should return higher profits than less labor-intensive industries, but there is no evidence to support this. Indeed, in the modern economy, and perhaps ironically as a consequence of Marx's work, the reverse is more likely to be true.

You're confusing the Marxist use of the word value with the common use of the word value. The word value (used without modifiers) when discussing Marxism is not analogous with "price", which would be more closely analogous with "exchange value".

As stated Marx did believe that value and price were connected, but that it was also effected by other market features.

Underlying all of this is Marx's prediction that profit will diminish over time and that capitalism is therefore a finite phase which must inevitably give way to something else. Here the premise is partly correct in that within any given industry, provided there is an effective level of competition, total profit will tend towards zero as the industry matures. However, this is actually the fundamental strength of capitalism rather than its weakness, because as mature industries become more optimized and less resources are required to fulfill production within them, the pursuit of profit will lead entrepreneurs to discover new opportunities and develop new industries.

The tendency of the rate of profit to fall (TRPF) is one of the most complicated and contentious parts of Marx's theories, so I won't be going in depth.

Suffice to say that Marx himself stated that this was only a general tendency (hence the name) and that there were many countervailing factors that he himself recognised. However on the whole he theorised a general and gradual decline in profits.

Simply pointing out that there were countervailing tendencies when he has already taken these into account in his theory is not valid criticism. Instead what is needed is to show that his assessment is wrong.
someloser
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5/4/2016 6:11:32 AM
Posted: 7 months ago
On the subject (http://voxday.blogspot.com...) :

Marx's clever sleight-of-mind was to posit that capital was nothing more than what had previously been skimmed off underpaid workers. If a baker underpaid his employees, then used that "surplus value" to buy a new oven, what looked like capital was really labor. Therefore, if value was capital + labor, and all capital was expropriated labor, value was labor. Or, to put it another way, value is abstract labor time.

Now, the flaw in this is immediately obvious. Value is not objective. A glass of water is essentially worthless to a man who lives by a lake, but is more precious than diamonds to man dying of thirst in the desert. Furthermore, it is quite clear that labor cannot be used as a viable means of determining value even when one examines a product that is nothing but pure labor. Is a musical work on which a team of five musicians have labored for two years of inherently more value than a little piece that a single man dashed off in an hour? By the labor theory of value, the answer is yes. Few who have listened to Mozart or Bach would agree.

The labor theory looks particularly outdated in the information age. When digital bits are worth more than physical objects, when robots are constructing billions of dollars worth of automobiles, it becomes hard to imagine that all that value is being expropriated from the mass of clerical workers who are doing little but moving information from one place to another. Either we are all expropriating the value of those few Atlasas who are still engaged in what Marx would recognize as labor, or the theory is absurd.
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Overhead
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5/4/2016 11:40:58 AM
Posted: 7 months ago
At 5/4/2016 6:11:32 AM, someloser wrote:
On the subject (http://voxday.blogspot.com...) :

This dude is obviously a massive idiot. The sections you've quoted make no sense. He's getting tripped up by the most basic marxist terminology that is literally explained in the very first chapter of the very first volume of Capital.

It's not a case of the writer finding some amazing error with Marx's work, it's a case of them never even having read it so not even understanding what Marx is saying.

The word "value" without modifiers in Marxism does not refer to how valuable a personal personally find a commodity, so why would it be connected to that in any way. Marx did talk about this (again, even in the first chapter of the first volume of Capital) he simply used different terminology to describe that concept.

It's like saying "Obviously liquid assets don't really exist, because they're not liquid that you could, for instance, put in a cup!" Many words have multiple different usages in different contexts. In Marxism value has a specific terminology very different from normal usage. If it trips you up, every time you see "value" replace it with some special made up word like "laborosity" to help you distinguish it.

Either way, the writer of that article is pig ignorant and is trying to criticise something it's very very clear that he hasn't even the most basic grasp of and is likely just copying from what he's been told by a friend or what have you with no real thought or analysis. Meaningless semantics.